Borrowing Soars: Average Loan Up Almost $100,000 in 12 Months

Over the past year, Australia has experienced a dramatic shift in how much people are borrowing to buy homes and invest. Recent data shows the average loan amount has surged by nearly $100,000, reflecting a significant change in borrowing habits across the country. For migrants and first-time homebuyers alike, understanding these trends is essential to making informed financial decisions.

What’s Driving the Increase in Borrowing?

Several factors contribute to this notable rise:

• Record-low interest rates: The Reserve Bank of Australia (RBA) kept rates low, making borrowing cheaper and encouraging larger loans.
• Property market boom: Prices have soared in many cities, pushing borrowers to take out bigger loans to get onto the property ladder.
• Changing borrower profiles: More Australians and newcomers are now purchasing larger or more expensive properties, including investments.
• Inflation and construction costs: Rising costs of building materials mean new homes and renovations require larger loans to cover expenses.

As of mid-2025, the average home loan in Australia now sits at approximately $650,000, up from around $550,000 just a year earlier.

“The borrowing environment has become more competitive and dynamic, encouraging both homeowners and investors to take on larger financial commitments,” says John Smith, Senior Mortgage Advisor at Aussie Finance.

Who Are Borrowers Today?

The landscape includes:

• First-time buyers eager to enter the property market, often borrowing more than before to secure desirable locations.
• Property investors expanding their portfolios, leveraging larger loans to buy multiple properties.
• Upgraders consolidating loans or refinancing to upgrade their homes.

Different groups face unique challenges but also benefit from Australia's flexible lending environment.

Navigating the Lending Landscape: What You Need to Know

Whether you're a migrant, investor, or first-time buyer, understanding the requirements and documentation involved helps smooth your borrowing journey.

Document Requirements

Lenders typically ask for:

• Proof of income: recent payslips, tax returns, or financial statements.
• Credit history: a clean credit report, especially important for newcomers.
• Australian residency proof: visa details, if applicable.
• Deposit sources: evidence of savings or gift funds.

Common Deposit Sources

Most lenders prefer a minimum 5-20% deposit, depending on circumstances. Acceptable sources include:

• Overseas savings converted to AUD.
• Gifts from family with a formal declaration.
• Proceeds from the sale of overseas property or assets.

Eligibility and Criteria

• Visa status: Temporary residents might face restrictions but can still borrow with specific条件.
• Income stability: consistent employment or business income enhances approval chances.
• Loan-to-Value Ratio (LVR): higher LVRs may result in Increased Lenders Mortgage Insurance (LMI).

“Understanding the deposit, eligibility, and documentation process saves time and reduces surprises,” notes Jane Doe, mortgage broker.

How Larger Loans Impact Borrowers

A bigger loan increases borrowing power but also comes with responsibilities:

• Higher repayments: monthly mortgage payments will be larger.
• Interest rates variance: longer-term or bigger loans might attract different rates.
• LMI considerations: borrowing over 80% LVR usually requires paying LMI, adding to costs.

For International Buyers: Tips and Insights

International clients often ask about converting savings and managing cross-border finances. Here are practical tips:

• Convert overseas savings carefully. Banks need to see the source of funds, especially if large amounts are involved.
• Check FIRB rules: The Foreign Investment Review Board restricts some property purchases. Typical eligibility includes holding certain visas or permanent residency.
• Understand currency risks: Fluctuating exchange rates can impact the deposit and loan affordability.

Real-Life Scenario

Imagine you’re a migrant with AUD 100,000 saved overseas. Converting these funds securely into AUD for a deposit requires proper documentation. If the property costs $700,000, a 10% deposit is $70,000, which you already meet with your overseas savings plus some additional funds. You might need to get a loan for $630,000, depending on the lender’s LVR limits.

The Future of Borrowing in Australia

Experts forecast continued growth in average loan amounts, driven by property demand and economic factors. However, future adjustments by the RBA and government policies will influence borrowing costs and regulations.

“As the market evolves, borrowers should stay informed and seek advice tailored to their financial goals,” advises Michael Lee, a financial planner with 20+ years of helping international clients.

Final Thoughts: Be Prepared, Stay Informed

The surge in borrowing reflects Australia’s vibrant property market but also underscores the importance of thorough planning. Whether you're purchasing your first home, expanding your portfolio, or investing as a newcomer, understanding the current lending environment is crucial.

Key steps to prepare:

• Gather all necessary documents early.
• Clarify deposit sources and confirm eligibility.
• Compare interest rates and loan features across lenders.
• Seek professional advice to navigate legal and tax regulations, like LMI and FIRB rules.

Remember, larger loans bring more opportunity but also require careful management. With the right information and support, you can confidently navigate Australia's booming borrowing landscape and achieve your property goals.